AUSTRALIA'S TASK.

Auckland Star, Volume LXIV, Issue 70, 24 March 1933, Page 5

AUSTRALIA'S TASK.

WAY TO RECOVERY. HGW SLUMP WAS FOUGHT. CONFIDENCE ESSENTIAL. A review of the stepe taken by Australia to counter the effects of the depression was given by Senator W. | Maesy Greene, Federal Assistant Trea- j surer, when speaking at a luncheon ten- I dered to him and the other members of the Australian trade delegation by the New Zealand Travelmen'e League. Australia, he said, had taken two principal lines of action: One was frankly deflationary, in character, and the other was what was termed "reflationary." The deflationary line was very much similar to what Xew Zealand had had to do; the Government had to curtail | expenditure, social services, pensions, j etc., and the country had to face the conversion of ite internal loan of £550,000,000. Over 97 per cent of the bondholders had accepted the inevitable and voluntarily converted. Interest rates were cut down in every direction, and wages were reduced very materially through the Arbitration Court. All that was deflationary action which was inevitable. Debts and Prices. After all that was done, one great question to all intents and purposes had 'been left untouched, the question of the relation of debts and prices. It was quite true that nothing they conld do could entirely eliminate the tremendous disparity which still existed, and • would exist till prices improved, between j debts contracted at the time of high '■ prices and existing prices. Australia !,vas in a slightly different position, in that she had the Commonwealth Bank, which to all intents and purposes was la central bank. Through that bank the whole of the national finance had centred in the difficult times the country was ' experiencing.

Three principal steps taken gradually by the central bank liad very materially assisted the primary producers of ■-. the country and all debtors to meet their obligations. In the main, eaid Senator Greene, obligations were being met. Owing: to the action of the central bank in handling the exchange between Australia and London, in the creation of central bank credit, and through the bank using its influence to reduce interest rates further, Australia had been assisted materially to "get through." When the country faced the depression it also faced a possible deficit of £40,000,000 on revenue account: a tragic position. To-day, taking into account the surplus which the Commonwealth Government would show on its transactions for the 3'ear, it could be said that the country was approaching Budget equilibrium. He was perfectly certain that it would have been impossible to have got to that point by purely deflationary methods.

Evidences of Improvement

Now, the country could, see evidences of improvement. Unemployment figures were falling fast, and he thought that the Commonwealth Government would be able to reduce taxation next year. Further, there was, a vevy definite improvement in trade, and the corner had been turned as far as trading was concerned. "We are showing improved figures in practically every branch of the ordinary trade of the country," he said. "All that is required to put us on the road to a genuine and true prosperity is an improvement in world prices. I do believe it is possible after certain stops have been taken, to do something to restore world prices, and, above all, give that confidence in new enterprise without which it will be impossible to get back to a prosperous basis."